SusanY1
Employee Tax Expert

Get your taxes done using TurboTax

Thank you for sharing your tax file token.  I've had a chance to take a look, and the reason the credit is being reduced is because it is limited to the tax on your return. (Form 1040, Line 16)

Since the foreign tax credit is a nonrefundable credit only the amount of the credit equal to your tax will transfer to Form 1040 (and Schedule 3 Line 1).  

You can "test" this yourself by temporarily adding some additional income (interest is a good place to add it) and then you'll see that credit increase to match the additional tax.  If you do this, don't forget to remove the dummy income, of course!

 

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